Fresh Qantas buyback after 18% profit lift

Qantas has lifted first-half profit 18 per cent to $607 million and will conduct a $378m buyback.

Qantas will hand over yet more cash to shareholders with another buyback after the carrier lifted first-half profit 18 per cent to $607 million.

Net profit for the six months to December 31 fell short of 2016's record $688 million due to $119 million of costs including redundancies and the introduction of the Dreamliner aircraft.

But underlying pre-tax profit soared 14.6 per cent to a record $976 million - beating guidance of $900 million to $950 million - and the airline said it will again give money to shareholders by buying back up to $378 million of shares over the second half.

The move, which will take the total spent on buybacks since 2016 to more than $1.6 billion, helped Qantas shares climb 5.9 per cent to $5.58.

Chief executive Alan Joyce said Thursday's result included $181 million of benefits from the long-running transformation program - which has included hefty redundancies, route changes and aircraft retirements - and that Qantas had a full-year target of $400 million.

"After several years of consistent performance, we now have a lot of momentum behind us," Mr Joyce said.

"We're vigilant about maintaining that momentum and we're confident about the future it allows us to build."

Net passenger revenue rose to $7.493 billion from $7.064 billion in the prior corresponding period, while freight revenue jumped to $440 million from $416 million.

Citi analysts said Qantas domestic was a stand-out performer with 5.3 per cent revenue growth and a 20.4 per cent lift in underlying earnings before interest and tax.

"Overall, the market should be pleased with another record result," Citi said.

Budget subsidiary Jetstar reported record half-year underlying earnings of $318 million, up 15.6 per cent on the back of improved domestic demand and capacity management.

That was despite a $10 million hit to international operations from last year's Bali volcano eruption.

Total group capacity is expected to increase by about one per cent in the second half - driven by a two-to-three per cent rise in international capacity - but Qantas expects continued growth in so-called unit revenue.